Festive season: Airline companies launch fare war

Festive season: Airline companies launch fare war

Low-cost air carriers IndiGo, SpiceJet and GoAir have cut fares by five to 20 per cent, the latest move in a price war this festive season between them and their full service counterparts, Jet Airways and government-run Air India.

Over the past six months, air fares had gone up 30 per cent, thanks to the reduction of rival Kingfisher's fleet to a bare minimum and the cap in capacity expansion by most airlines.

AI broke the ranks last Friday, dropping the basic fare on all domestic routes by 40 per cent, provided customers bought the ticket 30 days in advance. Jet did likewise a day later.

Festive season: Airline companies launch fare war

This had slowed in recent quarters, leading to worry of the market shrinking.

Domestic air traffic during July fell 1.1 per cent compared to a year before, the worst performance for any market, reflecting the weakening economy among other factors, the International Air Transport Association said.

Compared to last August, passenger traffic fell 8.7 per cent in 2012.

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Image: Construction workers erect scaffolding at the site of metro station as a SpiceJet Airlines aircraft flies past in Chennai.Photographs: Babu/Reuters

Festive season: Airline companies launch fare war

While 4.78 million passengers flew in August 2011, the number declined to 4.37 mn last month, according to the directorate general of civil aviation.

Executives in the travel portals say it is possible the airlines might sell their inventory (usually done seven to 14 days before a flight) at a higher price to offset the tickets sold at a discounted price and might not lose money.

Jet has introduced new 21-day and 30-day apex fares, offering attractive savings on several domestic routes.

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Image: An IndiGo Airlines A320 aircraft is parked on the tarmac at Bengaluru International Airport.Photographs: Vivek Prakash/Reuters